US 500 index stands above the 200-day SMA but for how long?

The US 500 index is losing some momentum after an aggressive buying interest above the 200-day simple moving average (SMA) and the 4,000 round number in the preceding week.

Technically, the RSI indicator is moving lower in the positive region, while the MACD is edging sideways near its trigger line and above the zero level. Both are suggesting a bearish correction. On the other hand, the 100- and 50-day SMAs are heading upwards, suggesting that the next movement would be to the upside rather than to the downside.

A reversal to the downside could stall at the near-term uptrend line near 4,000 ahead of the 20-day SMA at 3,930 and the 3,900 support level. Further below, the 50-day SMA at 3,830 could also provide support ahead of the 3,700 barrier.

Alternatively, if the bulls retake control and send the market higher, the 4,150 peak, registered on September 13 could potentially trigger further buying pressure, probably leading the price up to 4,325.

To sum up, the short-term bias is bullish as the market has jumped above the eight-month unbroken 200-day SMA. However, any moves below that line could shift the outlook back to negative.

About the author

Melina Deltas

Melina joined XM in December 2017 as an Investment Analyst in the Research department. She can clearly communicate market action, particularly technical and chart pattern setups. Her technically focused method looks mainly at price action across multiple time frames to capture big moves that develop over the years. She has more than 3 years of experience in analyzing financial markets, specializing in forex, indices, and commodities. Melina studied Pure Mathematics at Lancaster University and has a Master's Degree in Monetary and Financial Economics from the University of Cyprus. Currently, she is an associate member of the Society of Technical Analysts (STA) and a Certified Financial Technician (CFTe).